04 August 2010 02:35 [Source: ICIS news]
HOUSTON (ICIS)--Dow Chemical and Saudi Aramco will build what will likely be one of the last large petrochemical complexes, as the Middle East loses its cost advantage in feedstocks, Dow chief executive Andrew Liveris said on Tuesday.
The two companies plan to build a massive complex in Jubail Industrial City, a change from an earlier proposed site at Ras Tanura.
"It's really going to be one of the last large complexes," said Liveris, who made his comments during an earnings conference call.
Liveris based his prediction on the likelihood of feedstock costs rising in the Middle East.
The new crackers being built in the Middle East are mixed feed, relying on natural-gas liquids (NGLs) and possibly naphtha, Liveris said.
"As a consequence of that, you're going to find that everyone is going to start having a rising tide of gas and ethane prices," Liveris said.
Another factor is the possible privatisation of the National Petrochemical Co (NPC) in Iran, a factor that Dow considers inevitable, Liveris said. Privatisation would change the natural-gas structure in the Middle East.
In fact, an analyst had said earlier that the NPC privatisation would raise natural-gas prices.
Liveris's comments followed similar ones he made during Dow's first-quarter conference call.
Then, Liveris said that the Middle East was running out of NGL production - in particular, ethane.
"It is mostly dry gas [methane] with the exception of Iran," Liveris said during the first-quarter conference call.
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